New Jersey companies Columbia Financial Inc., the parent of Columbia Bank in Fair Lawn, and Stewardship Financial Corp., the parent of Atlantic Stewardship Bank in Midland Park, announced the signing of a definitive merger agreement.
Under the agreement, Stewardship shareholders will receive $15.75 in cash for each share of Stewardship common stock held. The aggregate consideration in the transaction is approximately $137 million, and the per share consideration represents 166.8 percent of Stewardship’s tangible book value as of March 31 and equates to approximately 17.4x Stewardship’s trailing 12-month net income through March 31.
Stewardship’s wholly owned subsidiary, Atlantic Stewardship Bank, has 12 banking offices in northern New Jersey. Established in 1985, the bank is a full-service commercial bank serving individuals, businesses and their communities. As of March 31, Stewardship Financial Corp. had total assets of $961 million, loans of $747 million and deposits of $784 million.
Thomas J. Kemly, Columbia’s president and CEO, commented, “We are pleased to announce the strategic combination of the two banks, both of which are strong community banks dedicated to serving their local communities. Our companies share common values with a strong culture focused on relationships and serving our communities, making this combination a perfect partnership. We greatly admire the philanthropic support Stewardship provides through its tithing program and the Columbia Bank Foundation, one of the largest private charitable foundations in New Jersey, is proud to continue various aspects of Stewardship’s charitable mission. We believe the merger represents a significant step towards profitability deploying capital we raised in our public offering and is a great fit with our growth plan.”
Paul Van Ostenbridge, who has served as president and CEO of Stewardship since 1997 and of Atlantic Stewardship Bank since 1985, commented, “We are excited about the combination with Columbia Bank and the amazing opportunities this presents to our customers and the community through an expanded platform with greater financial resources. Columbia has a history of delivering quality, competitive financial services and a positive customer experience along with making a difference in the communities we serve. These shared philosophies make the blending of our two companies the faithful evolution for Atlantic Stewardship Bank.”
The transaction, which has been unanimously approved by each company’s board of directors, is subject to satisfaction of customary closing conditions, including receipt of various regulatory approvals and the approval of the Stewardship shareholders and is expected to close in the fourth quarter after all such conditions are met. Upon closing, Atlantic Stewardship will merge into Columbia Bank.
Also upon closing, Van Ostenbridge will join the board of directors of Columbia and Columbia Bank and a board member of Stewardship will be selected by the Columbia Bank Foundation to serve on its board of directors.
Columbia expects the parties, in the aggregate, will incur one-time pre-tax cash transaction expenses of approximately $14 million. Columbia expects to achieve cost savings of approximately 48 percent of Stewardship’s non-interest expenses with 80 percent of the savings recognized in 2020. On a pro forma basis, the transaction is expected to be accretive to Columbia’s 202 earnings per share by approximately 16.2 percent, excluding one-time costs. Columbia expects initial tangible book value dilution associated with the transaction to be earned back, based on the crossover method, in less than five years.